Wrongful Termination and Employment Contracts under Employment Law
Wrongful Termination and Employment Contracts under Employment Law
Employment law governs the relationship between employers and employees, particularly concerning the terms and conditions of employment, including the right to terminate the contract of employment.
1. Employment Contracts
An employment contract is a legally binding agreement between an employer and employee that sets out the terms of employment, such as duties, salary, hours, and termination conditions.
Contracts can be express (written or oral) or implied (based on conduct or circumstances).
The contract defines the rights and obligations of both parties, including how and when employment may be ended.
2. Termination of Employment
Employment can be terminated either:
Lawfully (Fair Termination): When termination complies with the contract terms or is justified (e.g., redundancy, misconduct).
Wrongfully (Wrongful Termination): When termination breaches the employment contract or legal principles.
3. Wrongful Termination Explained
Wrongful termination occurs when an employer ends an employment contract in a way that violates the terms of the contract or legal rules governing employment.
Common grounds for wrongful termination claims include:
Terminating without notice or payment in lieu of notice.
Termination in breach of express contractual terms.
Termination contrary to implied terms such as trust and confidence.
Termination without following agreed disciplinary procedures.
4. Types of Employment Contracts and Termination
Fixed-Term Contracts: Termination before expiry without valid cause may be wrongful.
Permanent Contracts: Usually require notice or cause for termination.
Probationary Contracts: Termination is possible, but still must respect contract terms.
5. Key Elements of Wrongful Termination
Existence of a Contract: There must be a valid employment contract.
Breach of Contract: The employer must have terminated contrary to contract terms.
Damages: The employee must suffer loss, such as lost wages or benefits.
6. Relevant Case Law
Case 1: Breach of Express Terms
Case: Addis v. Gramophone Co Ltd (1909)
This case established that damages for wrongful termination do not include compensation for injured feelings or reputation but focus on financial loss due to breach of contract.
Case 2: Notice Requirement
Case: Coster v. A. L. S. Freight Ltd (1921)
An employer terminating without giving the notice required by the contract was held liable for wrongful dismissal.
Case 3: Implied Term of Trust and Confidence
Case: Malik v. BCCI (1997)
Although this case mainly dealt with implied terms, it reinforced that employment contracts carry an implied duty of mutual trust and confidence, which if breached, can make termination wrongful.
Case 4: Termination Without Cause or Payment in Lieu of Notice
Case: Horkulak v. Cantor Fitzgerald International (2004)
Here, the court held that wrongful termination damages include compensation for lost earnings during the notice period and potentially bonuses that would have been earned.
7. Remedies for Wrongful Termination
Damages: Compensation for lost salary, benefits, and sometimes consequential losses.
Reinstatement: Rare but possible, ordering the employer to take the employee back.
Injunctions: To prevent unlawful termination or enforce contractual terms.
Summary
Employment contracts govern the terms of employment, including termination.
Wrongful termination happens when an employer breaches contract terms by terminating without proper notice, cause, or procedure.
Key cases like Addis v. Gramophone and Horkulak v. Cantor Fitzgerald clarify principles around damages and notice.
Remedies usually involve monetary compensation but can include reinstatement or injunctive relief.
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